A mileage-based user fee study in Minnesota generated nearly $38,000 in simulated revenue over six months.

Summary Information

In 2007, the Minnesota Legislature appropriated $5,000,000 for a technology research project exploring mileage based user fees (MBUF). The Minnesota Department of Transportation (Mn/DOT) was tasked with leading the effort of executing a pilot project to demonstrate technologies that would allow for the eventual replacement of the gas tax with a cost-neutral mileage charge.

The objective of the Minnesota Road Fee Test (MRFT) was to inform future public policy decisions regarding mileage-based user fees and connected vehicle applications. To accomplish this, Mn/DOT utilized a commercially available after-market device, a smartphone, to assess mileage-based user fees and convey safety alerts to drivers through in-vehicle signing.

MethodologyWright County, Minnesota was selected as the key study area for the mileage-based user fee (MBUF) as it had the highest population of counties adjoining the Twin Cities Metro Area, desirable because many trips would include mileage inside and outside the Metro Area. The county also has a good demographic mix between urban and rural residents, enabling access to a broad variety of viewpoints. The fee structure for the MBUF is in the following table:

Current Driving Location

Peak Times (Monday-Friday 7AM-9AM and 4PM-6PM)

Off Peak Times

Outside of Minnesota

$0.00

$0.00

Inside Minnesota - Outside the Twin Cities Metro Zone

$0.01

$0.01

Inside Minnesota - Inside the Twin Cities Metro Zone

$0.03

$0.01

All Miles Driven without Device/Non-Technology Miles/"opt-out" miles

$0.03

$0.03

In addition to the MBUF, in-vehicle safety alerts (visual and audible) were included for 98 different types of zones, including school zones, speed zones, curves, and construction zones.

The study consisted of 500 voluntary participants, 478 of whom completed the entire study. Naturalistic data was collected from each participant for four months after a two month acclimation/baseline period. Study participants facilitated the collection and generation of the following:

660 million trip data points and nearly 4 million miles representing data on nearly 500,000 trips across a total of 478 participants who completed all test activities.

2,750 invoices, resulting in collection of over $32,000 in simulated fees.

The MBUF system was capable of assigning variable mileage fees determined by user location or time of day, as well as presenting in-vehicle safety notifications which had measure effects on participants' driving habits, successfully meeting its primary objectives.

The MBUF field test generated almost $40,000 in simulated revenue and monthly statements for each individual participant averaged $20, the average cost to a driver participating in the field test was about $0.66 per person per day.

17 percent of participants reported that rates were higher than expected

53 percent of participants reported that rates were about what they expected

30 percent of participants reported that rates were lower than expected

Overall, the pilot study achieved a collection rate of 98 percent, and 99 percent or better for the first three invoices (most participants received six invoices, some up to eight). Based on their experience in the in the pilot, participants were asked if they would prefer the MBUFs as a replacement of the fuel tax. Their responses:

37 percent indicated a preference for the MBUFs

48 percent indicated a preference for continuing with the fuel tax

15 percent indicated no preference or unsure

Based on participants’ total fee miles and estimated fuel efficiency, it can be estimated that participants would have paid approximately $33,000 in fuel taxes for all miles recorded during the test period. When considering miles recorded on the device only, participants incurred slightly less than $20,000 in mileage-based user fees; when considering all miles driven (based on odometer readings), participants incurred almost $38,000 in fees. Noting that non-technology miles incurred a higher per mile rate.

The pricing elements of the test may have made participants more aware of their total mileage driven during peak hours in the Twin Cities. Compared to the baseline period, which did not show drivers a rate per mile, mileage and fees per day in the Metro Area dropped by 15.6 percent during the test period. Overall, there was a 2.5 percent reduction in miles driven in the MBUF study.

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